If you own, or are buying or selling, a leasehold property, there are important updates to leasehold law that could impact you in 2025. These changes aim to simplify and improve the rights of leaseholders, making property ownership fairer and more transparent.
What is Leasehold?
With a leasehold property, you own the property but not the land it’s built on. Instead, you hold a lease for a set number of years and usually pay ground rent to the landowner, known as the freeholder. Leasehold is common for flats and some houses, with over five million leasehold properties across England and Wales. (Scotland has abolished leasehold altogether.)
Recent Developments in Leasehold Law
The Leasehold and Freehold Reform Act, passed by the last government, has not yet come into force. However, once operational, it will bring significant benefits for leaseholders. These include:
- Extending lease terms to 990 years with zero ground rent.
- Providing greater transparency over service charges.
- Banning the sale of new-build houses as leasehold.
- Making it easier for flat leaseholders to collectively manage their building.
In November, the government confirmed plans to bring the Act into effect and proposed further reforms. Housing Minister Matthew Pennycook announced that the new Leasehold and Commonhold Reform Bill will be introduced in 2025 to enhance leaseholder rights further.
What’s Proposed in the New Bill?
The upcoming Bill aims to strengthen leasehold law by:
- Simplifying the process for extending or buying a lease or freehold.
- Regulating ground rents and maintenance charges, especially on private housing estates.
- Introducing new rules for managing agents to ensure better accountability.
- Introducing commonhold ownership as an alternative to leasehold.
Commonhold ownership allows flat owners to hold their property on a freehold basis and share responsibility for the block, eliminating the need for a freeholder. It is a substantial departure from the traditional leasehold system.
Leasehold Reform: What Should You Do Now?
Although these changes could revolutionise leasehold law, there is still uncertainty about when they will be enacted. For now:
- Check if the property you are buying or selling is leasehold – this will be noted in the particulars.
- Seek guidance from your estate agent or conveyancing solicitor, who can explain the potential implications of these changes on your transaction.
- Visit the Leasehold Advisory Service website for free, independent advice tailored to residential leaseholders.
By staying informed, you can better navigate the complexities of leasehold law and make confident decisions about your property.
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